The Good: The July spring wheat contract has gained more than US$1.00 per bushel in the past two trading sessions as a bullish USDA report propelled values higher. The smaller HRW crop (see the Ugly) will mean that demand for spring wheat will increase in the domestic U.S. market in the 2022-23 crop year. That makes the spring wheat crop even more critical for the U.S. mill demand. Unfortunately there is very little seeding occurring in parts of North Dakota and Minnesota with more rain on the way.
The Bad: The canola market closed the day down 30 cents per tonne in the July contract, which settled at C$1,152 per tonne. The drop was not unexpected as the vegetable oil market was mixed today. Palm oil futures were up today, while the soybean oil markets were down by 0.8 per cent. Soybean futures were up seven to eight cents per bushel on what was a neutral USDA report for soybeans. Canola seems to be stuck in a trading range after hitting new contract highs in late April.
The Ugly: The number that shocked the wheat market was the HRW production estimate which came in at 590 million bushels. MarketsFarm believes that the HRW crop will eventually hit the 560 million bushels, but felt that the USDA would show conservative yield reductions in May. The pre report estimate from the trade averaged 685 million bushels and MarketsFarm felt that an initial May production number in the 630 to 650 million bushels was most likely. The yields in Kansas are still too optimistic at 40 bushels per acre. Yes, there is still time for the crop to recover, but it is rapidly running out. Thirty per cent of the crop is in the heading stage in Kansas and the crop has been stressed by hot temperatures this week. Temperatures in Kansas are in the upper 80’s and low 90’s F. Temperatures will cool to the mid 80’s on the weekend, but rebound back to the 90’s by the middle of next week. That makes the current yield forecast of 40 bushels per acre seem very optimistic at this stage o the growing season. The harvest in Kansas begins in the south-central growing areas in early June. Time is running out for the HRW crop!